9911796707
TMI Blog2022 (7) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Project Arihant Anchal Phase I, during the period 1.07.2017 to 30.09.2019 as Rs. 1,78,32,984/-. Therefore, the amount of ITC benefit to be passed on by the Respondent to all the homebuyers/shop buyers/customers is Rs. 1,78,32,984/-. This amount is inclusive of Rs. 34,137/- (including GST on the base amount of Rs. 31,104/-) which is the benefit of ITC required to be passed on with respect to Flat no. 4-301 in Tower Benicia which has been agitated by the Applicant No. 1 - the amount of Rs. 1,78,32,984/- (including 12% GST) that has been profiteered by the Respondent from his homebuyers/shop buyers/customers, including Applicant No. 1, shall be refunded by him, along with interest @18% thereon, from the date when the above amount was profiteered by him till the date of such payment, in accordance with the provisions of Rule 133 (3) (b) of the CGST Rules 2017. Interest - HELD THAT:- The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs.1,78,32,984/-. Hence the Respondent is directed to also pass on interest @18% to the homebuyers/shop buyers/customers, including Applicant No. 1 on the entire amount profiteered, starting from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.- a) E-mails of correspondence with Respondent requesting to pass on the benefit of ITC b) Copy of Invoices. Demand Letters and receipts. c) Copies of e-mail dated 01.06 2017 sent to CM Rajasthan portal along with copy of call letter dated 30.05.2017 asking for an additional payment of Rs. 7,000/- on each one Iakh rupees after implementation of GST. d) Copy of reply dated 22.02.2016 given by State GST Rajasthan. e) Press Releases dated 06.121017 12A 2 2017 issued from office of Chief Commissioner of Central Tax Customs, Visakhapatnam on Clarification on Levy of GST on flats/residential complexes and buildings . 3. The DGAP has further reported that on receipt of the aforesaid reference from the Standing Committee on Anti-profiteering on 09.10.2019, a Notice under Rule 129 of the Rules was issued on 21.10 2019, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suo moto determine the quantum thereof and indicate the same in his reply to the Notice as well as to furnish all documents in support of his reply. Further, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment and there was 16 projects under construction. The Respondent had completely integrated in-house capabilities of Land Acquisition Procurement, Liaison, Design Engineering, EPC and Marketing Sales. It further ensured tight control and quality considerations and the Respondent never compromised on additional features like tiles and fittings etc which were standardised across all projects. It was one of the reasons why customers prefered the Respondent as a builder as evinced by many awards that he had won to date. (b) That the Project Arihant Anchal was stituated on leasehold land with description Khasra No. 667, 668, 670, 671, 673 to 677. Village Choka Jodhpur, with a total area of 99599.74 sq. mt. The said land had been allotted by Jodhpur Development Authority JDA) to the Respondent on a 99 years lease for development of housing project, Further JDA had allotted this land to the Respondent for construction of affordable housing project, Vide agreement dated 10-01-2011, the total area of land was 133061 sq. mt, out of which 33461.26 sq mt of land was used to construct 1350 affordable housing, free of cost for JDA. Residual land of 99599.74 sq nit. was given on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aanchal Phase-l pertains to 532 Units (developer share) only and therefore no benefit of CENVAT/ITC was required to be passed on to JDA in respect of the same. 7. Further the DGAP stated that vide the aforementioned letters/ e-mails, the Respondent submitted the following documents/information : (a) Copies of GSTR-1 for the period July. 2017 to Sept. 2019. (b) Copies of GTR-3B for the period July, 2017 to Sept, 2019. (c) Copies of ST-3 Returns for the period April, 2016 to June, 2017. (d) Copies of VAT Returns in form 7A, 8A and 10 for the period April, 2016 to June, 2017. (e) Copy of Manual Tran-1 along with copy of Hon'ble High Court of Rajasthan's Order w.r.t. TRAN-1. (f) Tax rates - pre-GST and post-GST. (g) Copy of Audited Balance sheet for FY 2016-17, 2017-18 2018-19. (h) Copy of demand letters/invoices issued to the Applicant No. 1. (i) Copy of Electronic Credit Ledger for the period July, 2017 to Sept, 2019, (j) CENVAT/ITC register for the period April, 2016 to Sep, 2019, (k) Copy of MoU entered between the Respondent and the Jodhpur Development Authority (JDA) (I) Status for the project Arihant Aanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. Further, by issuing such Credit Note, the Respondent had reduced his Output GST Liability and on the other side was not passing on the same benefit of tax reduction to the Flat Buyers. b. That Applicant No. 1 also submitted sample copies of correspondence with the Respondent, from March, 2016 to February. 2019, where Applicant No. 1 had requested several times to provide the details of reduction in the prices and pass on the benefit to him. c. The Applicant No, 1 had submitted that the approx. profiteering per unit was Rs. 25,600/- and the project consisted of 2324 units so total profiteering was approx. 5.95 Crores d Applicant No. 1 had also submitted that the Respondent had collected the amount in Non-RERA bank accounts and was not transferring the proper receipts into the RERA Accounts. 10. The DGAP further reported that reference received from the Standing Committee on Anti-profiteering, various replies of the Respondent, Applicant No. 1 and the documents/ evidences on record had been carefully scrutinised. The main issues for determination were: (i) Whether there was benefit of reduction in the rate of tax or ITC on the supply of Construction Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.00% 18. Possession 3.00% Total 100.00% 12. The D AP has further stated that with regard to the Applicant No. is submission that the project Aanchal consist of 2324 units, it was observed that the project Aanchal was being developed in phased manner and the Applicant No. 1 s Flat was situated in Phase-I which had a separate RERA Registration No. 'RAJ/P/2017/322' dated 10.10.2017 consisting of 532 units only of standard size of 900 sq, ft, each. Therefore, the scope of the present investigation was limited to the extent of Construction Service supplied by the Respondent in the project Aanchal Phase-I 13. The DGAP has further stated that the allegation of the Applicant No 1 with regard to collection of the amount in Non-RERA bank accounts and not transferring the proper receipts in to the RERA Accounts was outside the scope of provisions of Section 171 of the CGST Act, 2017 the Rules made thereunder. Therefore, the grievance of the Applicant No 1 could not be redressed through anti-profiteering provisions. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of Central Excise Duty and VAT paid on the inputs. However, post-GST, the Respondent could wail ITC of GST paid on all the inputs and the input services including the sub-contracts. From the information submitted by the Respondent for the period April, 2016 to September, 2019, the details of the ITC availed by him, his turnovers from the impugned project Arihant Aanchal the ratios of ITCs to turnovers, during the pre-GST (April, 2016 to June, 2017) and post-GST (July. 2017 to September, 2019) periods have been furnished in table- C below: Table- C' (Amount in Rs.) S.No. Particulars April, 2016 to June, 2017 (Pre-GST) July, 2017 to Sept.2019 (Post-GST) 1. CENVAT of Service Tax Paid on Input Services Used (A) 51,79,884 - 2. ITC of VAT Paid on Purchase of Inputs (B) - - 3. ITC of GST Availed (C) 3,00,80,926 4. Total CENVAT/ITC Available (D)= (A+B) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Output GST Rate (%) B 3. Ratio of CENVAT credit/ ITC to Turnover as per table -'A above (%) C 6.67% 4. Increase in ITC availed post-GST (%) D=6.67% less 1.27% 5.40% 5. Analysis of Increase in ITC: 6. Base Price raised/collected during July, 2017 to Sept.2019 (Rs.) E 11,23,91,039 18,92,24,522 30,16,15,561 7. GST @ 12% or 8% over Base Price F=E*12% or 8% 1,34,86,925 1,51,37,962 2,86,24,887 8. Total amount to be collected/raised G=E+F 12,58,77,964 20,43,62,484 33,02,40,448 9. Recalibrated Base Price H=(E)*(1-D) or 94.60% of ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, out of which 4 customers booked the flats in pre-GST period and also paid amounts in pre-GST period but they had not paid any consideration during the pest-GST period from 01.07.2017 to 30.09.2019 (period covered by investigation). If ITC in respect of these 4 units was taken into account to calculate profiteering in respect of other units where payments had been received post-GST, the ITC as a percentage of turnover would have been distorted and erroneous. Therefore, the benefit of ITC in respect of these 4 units should have been calculated when the consideration was received from the concerned home buyers. by taking into account the proportionate ITC in respect of such units. 21. The DGAP also further submitted that the Respondent had also claimed that he had passed on the benefit of Rs. 78,39,384/- to the 309 home buyers (net of cancelled units). The Respondent had submitted copies of Credit Notes and invoices vide his various submissions dated 08.10.2020, 12.10.2020, 24.10.2020 02.11.2020 vide which he had passed on the benefit of ITC. Further, the Respondent had submitted that he had e-mail IDs of 50 customers only On examination of the documentary evidences submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returned to such eligible recipients. As observed earlier, the Respondent had supplied Construction Services in the impugned project in the State of Rajasthan only. 24. The DGAP has also concluded that as the present investigation covered the period from 01.07.2017 to 30.09.2019, Profiteering, if any, for the period post September, 2019, had not been examined as the exact quantum of ITC that would have been available to the Respondent in future could not be determined at this stage, when the Respondent was continuing in availing ITC in respect to the present project. 25. The DGAP further submitted that Section 171 (1) of the CGST Act, 2017, requiring that any reduction in rate of tax on any supply of goods or services or the benefit of ITC shall be passed on to the recipient by way of commensurate reduction in prices'. had been contravened by the Respondent amounting to Rs. 1,76,59,634/- 26. The DGAP has also claimed that in these proceeding, any reference to the CGST Act, 2017 and CGST Rules, 2017 shall also include a reference to the corresponding provisions under the relevant SGST/UTGST/IGST Acts and Rules. 27. The above Report was carefully considered by this A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putation of the benefit required to be passed on by the supplier to the recipient, therefore benefit had been passed by the Respondent on a provisional basis. i. That the DGAP itself was using different methodologies in different cases. j. That the entire exercise of not adopting like for like comparison and adopting of average method by the DGAP was arbitrary and in absence of specific method prescribed. was using estimates for arriving at the benefit to be passed on by the supplier to the recipient. k. That DGAP had done a comparison between the credit available in pre-GST and credit available in post-GST without analysing the reasons thereof. l. That exempted Goods in Pre-GST Regime had become taxable in GST, therefore any additional amount paid towards GST was not additional benefit accruing to assessee but availment of credit on account of additional outflow of the tax amount. m. That definition of Profiteering and ignoring increase in cost of inputs while arriving at the profiteered amount was incorrect. In the Order passed in the Case No. 3/2018 dated 04.05.2018 in the matter of Kumar Gandhary v. KRBL Ltd., this Authority had accepted the contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducting the enquiry had erred in not following the principal of natural justice. No show cause Notice to the effect was issued by the DGAP and an inference against the Respondent was being taken with the conclusion of the enquiry, z. That the impugned proceedings were violative of principles of natural justice as the DGAP had already prejudged the issue and had come to the conclusion that he had contravened the provisions of Section 171 of CGST Act, Although the Respondent had been afforded opportunity by this Authority to respond to the charges against him but in fact the said opportunity offered to the Respondent did not cure the inherent defects in the proceedings to the extent that he had been confronted with definitive charges at this show cause stage without any opportunity of nearing on merits been given till date. In this regard the Respondent relied upon:- i) the decision of Hon'ble High Court of Telangana in the matter of MIs. SBQ Steels Limited vs. The Commissioner of Customs, C.E and ST, Guntur. ii) the decision of Hon'ble Apex Court in the matter of Ryx Fisheries (P) Ltd v. Union Of India ((2010) 13 Supreme Court Cases 427). iii) the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77 SCR (3) 233 gg. That DGAP vide his Report had submitted that in 30 cases out of 298, the names mentioned in the list of home buyers were not matching with the copies of invoices issued by the Respondent for the same units and in 36 out of 50 sample cases (where e-mails IDs provided), the amount of benefit passed on as per copies of invoices was different from the amount as per list of home buyers. hh. That lack of availability of time even after taking 13 Months to complete the enquiry could not be a reason firstly for not providing sufficient time to the Respondent to cross examine the replies received from the customers and secondly for adopting the email mode of communication with the customers. That the inordinate time taken to complete the proceedings until 26.11.2020 was not on account of any delay on his part as he had submitted the documents when asked for even in Covid-19 Pandemic. The fact that last information was sought From the Respondent on 24.11.2020 and that also was replied by him on the same day showed that he was cooperating in the entire exercise but at the same time also reflected that proceedings had been concluded in a hasty manner without affor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... although to the extent of Rs. 78,39,384/- even though all the relevant evidences were submitted by him. pp. Further, the Respondent requested to grant him an opportunity of being heard personally before deciding the matter so as to put forth his case. 28. The Applicant No. 1 had also made his written submissions vide emails dated 12.01.2021 14.06.2021 and 05.04.2022 wherein he has stated/requested this Authority:- a. To either ask the Respondent about the Progress-cum-Status of the project or why not yet giving possession to the Applicant No. 1 when more than 50 families had already started living at Arihant Anchal or forward the matter about delay of the same (booking year was Feb. 2016) to Competent Authority or else advise the Applicant No 1 to submit grievances as per the dream or 'Sabka Awas Yojna of the Government of India and Prime Minister's Vision. A Number of facilities as per the advertisement were still required to be developed; this Authority might forward the matter to the competent forum or Authority to conduct inquiry. b. Forward recommendation based on the Applicant No. is written detailed application / submissions and the valuable inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed request cum application. g. That the Respondent's said project 'Arihant Aanchal was started in February. 2016. However, the period taken for calculation of profiteering was 01.07.2017 to 30.09.2019. Further, the Applicant No. 1 submitted that till March, 2021 the Respondent had collected Rs. 16,35,455/- with GST @ 18%/12%. h. To pass order on the basis of the similar matters already decided by this Authority as mentioned below:- (i) Abhishek Singh vs M/s. Aparna Constructions And Estates Pvt. Ltd., case no .... Dated (citation) (ii) Deepak Kumar Barnwal vs M/s. Manas Vihar Sahakari Awas Samiti Ltd. case no dated(citation) (iii) S. Ganapathy Subrarnanian vs Mahindra Lifespace Developers Ltd, case no dated(citation) (iv) Shivam Agarwal vs M/s. Gaursons Realtech Pvt. Ltd. (v) Manish Saini vs M/s. Ramaprastha Promoter Developer Pvt. Ltd., case no dated (citation) (vi) Dharmendra Gaud v JMK Holdings Pvt Ltd., case no ... dated(citation) i. To pass order for inquiry for the period beyond the period already covered in this application for calculation of further profiteered amount, as held in the matter of Jai Prak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e/ Completion Certificate would also affect the amount of benefit of ITC as no such benefit would be available once the above certificates were issued Therefore, no set of parameters could be fixed for determining methodology to compute the benefit of additional ITC which would be required to be passed on to the buyers of such units. Further, the Parliament as well as all the State Legislature have delegated the task of framing of the Rules under the CGST Act, 2017 to the Central Government as per the provisions of Section 164 of the above Act. Accordingly, the Central Government in terms of Section 171 i3) of the CGST Act, 2017 read with Section 2 (87) of the Act, has prescribed the powers and functions of the NAA and DGAP, on the recommendation of the GST Council, which is a Constitutional federal body created under the 101st Amendment of the Constitution, as per Rule 127 and 133 of the CGST Rules, 2017. Further, the power to determine its own Methodology Procedure has been delegated to this Authority under Rule 126 of the above Rules as per the provisions of Section 164 of the above Act as such power is generally and widely available to all the judicial, quasi-judicial and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nover availed by the Respondent post-GST had been quantified. The input or input service wise availability or non-availability of ITC prior and post implementation of GST had not been examined. Further there should be no extra liability on the Respondent on account of increase in rate of GST compared to Services Tax as the supplier of input services was now also enjoying ITC on all the purchases made by him resulting in reduction in prices of the materials purchased by him which should pass on to the Respondent. In the erstwhile pre-GST regime, various taxes and Cess were being levied by the Central Government and the State Governments, which got subsumed in the GST. Out of these taxes, the ITC of some taxes was not being allowed in the erstwhile tax regime. For example, the ITC of Central Sales Tax, which was being collected and appropriated by the States, was not admissible. Similarly, in case of construction service, while the ITC of Service Tax was available, the ITC of Central Excise Duty paid on inputs was not available to the service provider. Such input taxes, the credit of which was not allowed in the erstwhile tax regime, used to get embedded in the cost of the goods o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion (Para-22 to 26). d. The contention of the Respondent that no set of assumptions was proved by the DGAP at the end of mathematical exercise was incorrect as there was no assumption made by the DGAP rather it had done a thorough investigation based on the documents and information submitted by the Respondent and the Report clearly mentioned the procedure followed by the DGAP and the basis of computation made for determining the amount of profiteering. e. Further, the submission of the Respondent that there was no opportunity of hearing given to him and the conclusion had been arrived suo-moto was incorrect and hence denied. In this regard, it was submitted that on receipt of reference from the Standing Committee on Anti-profiteering on 09.10.2019, a Notice of Initiation under Ruts 129 of the CGST Rules, 2017 was issued by the DGAP on 21.10.2019, calling upon the Respondent to reply as to whether he admitted that the benefit of ITC had not been passed on to the recipients by way of commensurate reduction in prices and if so, to suo mato determine the quantum thereof and indicate the same in his reply to the Notice as well as to furnish aII documents in support of his repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him the DGAP has clarified that the Respondent had submitted that out of 30 cases, 23 flats were cancelled by the original buyers and then re-allotted to new buyers. However, during the course of investigation, the Respondent submitted copies of invoices issued to the original buyers to substantiate the claim of passing on the benefit to present customers (who bought the fiats in subsequent period) which could not be accepted. Further, as stated above, the DGAP could not verify the Respondent's claim of passing on the benefit to his customers, hence jurisdictional Authority might be asked to do so. i. For the averment made by the Respondent that it has been mentioned in the report that in 36 out of the 50 cases, the amount of benefit passed on as per copies of invoices was different from the amount as per List of Home Buyers. the DGAP has stated that the Respondent had submitted scanned copies of approximately 2000 invoices vide various submissions in piecemeal manner to substantiate the claim of passing on the benefit to his customers. Further, the invoices mentioned in Annex-7 of his submission dated 25.01.2021 were also received vide his e-mail dated 12.11.2020 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the exempted Goods in Pre-GST Regime had become taxable ire GST, therefore any addition amount paid towards GST was not additional benefit accruing to assesse, the DGAP has clarified that the amount of the additional benefit of ITC which was now available to the Respondent, can may in turn be utilized to pay the GST. It was therefore to be passed on to the customers by the Respondent in terms of Section 171 of the CGST Act. 2017. The Respondent has utilized the additional ITC available to him in post-GST period. Therefore, in the report dated 26.11.2020, the increase in ITC as a percentage of total taxable turnover availed by the Respondent post-GST had been quantified. The input or input service wise availability or non-availability of ITC prior and post implementation of GST had not been examined. Further there should be no extra liability on the Respondent on account of increase in rate in GST compared to Services Tax as the suppliers of input services were now also enjoying ITC on all the purchases made by them resulting in reduction in prices of the materials purchased by them which should pass on to the Respondent. m. For the contention raised by the Respondent regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITC of Central Excise Duty paid on inputs was not available to the service provider Such input taxes, the credit of which was not allowed in the erstwhile tax regime got embedded in the cost of the goods or services supplied. resulting in increased prices. With the introduction of GST with effect from 01.07.2017, all these taxes got subsumed in the GST and the ITC of GST was available in respect of all goods and services, unless specifically denied. Broadly, the additional benefit of ITC in the GST regime would be limited to those input taxes, the credit of which was not allowed in the pre-GST regime but was allowed in the GST regime. This additional benefit of ITC in the GST regime was required to be passed on by the suppliers to the recipients by way of commensurate reduction in prices, in terms of Section 171 of GST Act. 2017 p. For the contention raised by the Respondent that the DGAP had not considered certain key aspects which were required to be taken into consideration, the DGAP has stated that Section 171 (1) of CGST Act. 2017 mandates passing on of the benefit of additional ITC which had accrued to the Respondent during the entire life of the project before occupancy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the confirmation of the same from the homebuyers who booked their flats post GST.] Thus the contention of Petitioner that the booking made after introduction of GST needed to be excluded from computation of profiteering was wrong and hence denied. s. Further, for the submissions made by the Applicant No. 1 against the report of the DGAP, the DGAP has clarified that as stated in pars-23 of the Report dated 26.11.2020, the present investigation covered the period from 01,07,2017 to 30.09.2019. Profiteering, if any, for the period post September, 2019: had not been examined as the exact quantum of ITC that would be available to the Respondent in future could not be determined at this stage, when the Respondent was continuing to avail ITC in respect to the present project. 30. The Respondent vide his email dated 15.04.2022 filed rejoinder on the DGAP's clarifications dated 12.02.2021 and 25.03.2022 wherein he has re-iterated and relied upon his earlier written submissions dated 11.01.2021 and 25.01.2021. 31. The proceedings in the matter could not be completed by the Authority due to lack of required quorum of Members in the Authority during the period 29.04.2021 till 23.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of investigation as per the details required and had also been made available to recipients. That accounting entry regarding Profiteering benefit passed on whether by way of Invoice or by way of credit note has been duly passed in the Accounts and was an integral part of his accounts, The Respondent was a Listed Entity and accounts were being regularly audited as part of internal audit and Statutory audit under different statutes, therefore there arised no question that any evidence provided as invoice or Credit Note had not been accounted to by the Respondent. (v) That the account of the fiat buyer in the books of accounts not only considered the demand raised and interest payable far delayed payments and other charges and payments thereon but also considered the Anti-Profiteering benefit passed on by the Respondent whether by way of invoices or Credit Notes. Out of 532 flats, about 220 flats had been registered till date with all due communications. in addition to the submissions made and the fact that some of them had been registered and details of Credit Notes and invoices had been provided earlier to the DGAP as per details required fortified two facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat:- (i) Respondent in its submissions had failed to contradict the facts mentioned in the report submitted by DGAP. (ii) By way of asking for different dates in the name of natural justice the respondent was delaying the matter. (iii) It was therefore requested you to kindly consider the details submitted to NAA by him on various dates on 21.12.2020, 11.01.2021, 21.01.2021 and 04.04.2022 and decide the matter. 34. As the Respondent requested personal hearing in his submissions dated 11,052022, therefore, next hearing in the case was granted to the Respondent and the Applicant No. 1 on 20.06.2022. Therefore, hearing in the matter was held on 20,06.2022, which was attended by Shri Arpit Haldia, Chartered Accountant for the Respondent During the personal hearing the Respondent requested to conclude the hearing on the basis of his earlier written submissions dated 11.01.2022, 25.01.2022, 15.04.2022 and 11.05.2022. 35. The Authority has carefully considered the Reports filed by the DGAP. ail the submissions and the documents placed on record, and the arguments advanced by the Respondent. 36. The Authority finds that, Section 171 (1) of the CGST Act, 2017 deals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent and as per the provisions of Section 171 of the CGST Act. 2017 The findings of the DGAP has not violated any of the rights of the Respondent and the said Report was submitted to this Authority, which has provided ample opportunities to the Respondent to submit his position and also offered personal hearing. As such. principles of natural justice have been followed. Therefore. the above submission of the Respondent is not acceptable. 38.3 The Respondent has contended that there could not be a power to regulate prices in a tax enactment. The Respondent has also contended that no Methodology has been prescribed for determination as to whether, the reduction in rate of tax on the supply of goods or services or the benefit of ITC had been passed on by the registered person to the recipient by way of commensurate reduction in prices. In this regard, the Authority finds that, neither this Authority nor the DGAP have acted in any way as price controller or regulator as they do not have the mandate to regulate the same. The Respondent is absolutely free to exercise his right to practice any profession, or to carry on any occupation, trade or business, as per the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s entitled to receive the benefit of tax reduction on each product purchased by him. The word ''commensurate mentioned in the above Section gives the extent of benefit to be passed on by way of reduction in the prices which has to be computed in respect of each product based on the tax reduction or availability of additional ITC as well as the existing base price (price without GST) of the product. The computation of commensurate reduction in prices is purely a mathematical exercise which is based upon the above parameters and hence it would vary from product to product and hence no fixed mathematical methodology can be prescribed to determine the amount of benefit which a supplier is required to pass on to a recipient or the profiteered amount. One formula which fits all cannot be set while determining such a Methodology and Procedure as the facts of each case are different. In one real estate project, date of start and completion of the project, price of the house/commercial unit, mode of payment of price, stage of completion of the project. timing of purchase of inputs, rates of taxes, amount of ITC availed. total saleable area. area sold and the taxable turnover r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST so that a proper assessment of percentage of ITC available to the Respondent could be arrived at. Further, during this period there was no variation in rate of tax on services and prior to that there were several changes in the rate of service tax as well as changes in the conditions for eligibility of availment of CENVAT Credit of Service Tax and Excise Duty including rate of abatement etc. which would result in distorted picture of CENVAT. Thus, this period was taken to find out the average ratio of ITC availability with turnover. The ratio of ITC and turnover in Pre-GST is compared with ratio of ITC in post GST. The period during the GST period may be one month or one year, depending upon the period of investigation. It does not mean that if the period is larger than the availability of ITC would increase or decrease but it only gives a ratio which represents the period for comparison. It is a standard practice by the DGAP to take pre-GST period from 01.04.2016 to 30.06.2017 which has been followed in all cases. These cases have been upheld by this Authority. 38.6 The Respondent also avered that the exempted Goods in Pre-GST Regime had become taxable in GST, therefore an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the sacrifice of precious tax revenue made from the kitty of the Central and the State Governments and required to be passed on to the end consumers who bear the burden of tax. 38.8 One of the contentions of the Respondent is that assessee was entitled to avail credit on input services in Pre-GST Regime. The Authority finds that, in the erstwhile pre-GST regime, various taxes and Cess is were being levied by the Central Government and the State Governments, which got subsumed in the GST. Out of these taxes, the ITC of some taxes was not being allowed in the erstwhile tax regime. For example, the ITC of Central Sales Tax, which was being collected and appropriated by the States, was not admissible. Similarly, in case of construction service while the ITC of Service Tax was available the input tax credit of Central Excise duty paid on inputs was not available to the service provider. Such input taxes, the credit of which was not allowed in the erstwhile tax regime got embedded in the cost of the goods or services supplied, resulting in increased price. With the introduction of GST with effect from 01.07.2017, all these taxes got subsumed in the GST and the ITC of GST is availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is required to investigate on a complaint filed by an interested party/person whether a registered person has passed on the benefit of tax reduction or ITC to the recipients or not and hence during the course of investigation if it comes to the notice that the above two benefits have not been passed on to any recipient, including those who had not filed complaint against the registered person, the DGAP is legally bound to investigate the same and bring the facts before this Authority for determination of those benefits to the eligible recipients. It is also clear that the above benefit has accrued to the Respondent due to the concession given by the Central as well as the State Government out of the public exchequer, therefore, the DGAP is bound to investigate to ascertain whether the Respondent has misappropriated the amount of ITC which he was required to pass on to the buyers. The DGAP cannot overlook commission of an offence which has occurred under Section 171 (1) of the above Act once it has come to its notice during the course of the investigation and hence the above contentions of the Respondent are not correct, 38.11 The Authority finds that the Applicant no. 1 is an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers to substantiate the claim of passing on the benefit to present customers. Hence, it is clear to this Authority that the claim made by the Respondent is unverifiable and unsubstantiated. The Respondent has not submitted any reliable and sufficient information, evidence or documents to cause conclusive verification of their claim. 39. The Authority finds that, the Applicant no.1 has made various allegations in relation to:- (a) Non completion of the Project by the Respondent (b) Diversion of funds from RERA Account by the Respondent (c) Booking of fake expenses by the Respondent (d) Pressure from Respondent to buy back the Flat Unit (e) Issue of fake credit notes by the Respondent The Authority finds that, in terms of Section 171 of the CGST Act, 2017 and the relevant Rules, this Authority has been empowered to determine the profiteered amount, if any, on account of reduction in rate of tax or availability of ITC. The Authority has done such determination based upon the investigation conducted and Reports of the DGAP. Investigation into the other allegations made by the Applicant no. 1 are not within the ambit of this Authority and the said Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) (b) of the CGST Rules 2017. 44. It is evident from the above narration of facts that Respondent has denied the benefit of tax reduction to his buyers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offence under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. However. since the provisions of Section 171 (3A) have come into force w.e.f 01.01.2020 whereas the period during which violation has occurred is w.e.f. 01.07.2017 to 34.09.2019, hence the penalty prescribed under the above Section cannot be imposed on Respondent retrospectively for the impugned period. 45. The Authority also order that the profiteering amount of Rs. 1,78,32,984/- along with the interest @ 18% from the date of receiving of the profiteered amount from the homebuyers/shop buyers/customers till the date of passing the benefit of ITC shall be paid/passed on by the Respondent within a period of 3 months from the date of this Order. The amounts to be refunded to each individual homebuyers/shop-buyers/customers is as per Annexure 'A' to this order. 46. The con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CGST Rules, 2017 also directs the DGAP to investigate profiteering in relation to all other Projects executed by the Respondent if such Projects attract the provisions of Section 171 of the CGST Act, 2017 51. Further, the Hon'ble Supreme Court, vide its Order dated 23.03.2020 in Writ Petition (C) no. 3/2020, while taking Suo moto cognizance of the situation arising on account of Covid-19 pandemic, has extended the period of limitation prescribed under general law of limitation or any other special laws (both Central and State) including those prescribed under Rule 133(1) of the CGST Rules. 2017, as is clear from the said Order which states as follows:- A period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further orders to be passed by this Court in present proceedings. Further, the Hon'ble Supreme Court, vide its subsequent Order dated 10.01.2022 has extended the period(s) of Limitation till 28.02.2022 and the relevant portion of the said Order is as follows:- The Order dated 23.03.2020 is restore ..... 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